ICAEW BIP · Chapter 11 · Question 10 of 10
A company has demand for 5,000 units of its only product. Each unit needs 2 kg of material and 3 labour hours. Next period 9,000 kg of material and 16,000 labour hours are available. Which of the following is correct?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Material is a limiting factor, but labour is not
Explanation
Material needed = 5,000 x 2 kg = 10,000 kg, but only 9,000 kg are available, so material is a limiting factor (it allows only 4,500 units). Labour needed = 5,000 x 3 = 15,000 hours, which is within the 16,000 hours available. Labour is not a limiting factor.
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